The biggest change in the WTO from GATT 1947 was the establishment of an effective and efficient dispute settlement system. The member states concluded a separate Agreement in Annexure II of Marrakesh Agreement titled as ‘Understanding on Rules and Procedures Governing the Settlement of Dispute’.
The Mechanism has written lot of successful stories with getting the 400th complaint recently on 2nd November, 2009 which is an evidence of the member states’ confidence in the WTO system. On this occasion WTO Director General Pascal Lamy said, “This is surely a vote of confidence in a system which many consider to be a role model for the peaceful resolution of disputes in other areas of international political or economic relations.” Further he remarked, “All the political muscle-flexing and grandiloquence is discarded at the door once the case enters the WTO.”
Since coming into existence in January 1995, the WTO's 153 members initiated an average of approximately 27 disputes per year under the provisions of the Dispute Settlement Understanding, the WTO treaty governing the settlement of all disputes among the organization's members.
Of the 400 cases filed so far, approximately half have eventually been settled directly between the parties, under the system's mandatory consultation requirements, without going to litigation. Of the remainder, 169 have been the subject of panel and, where appealed, Appellate Body proceedings, 17 are currently in adjudication, and 12 are still the subject of active consultation between the parties.
There is also lot of criticism about the WTO DSM that it is dominated by the developed countries mostly EC and US. On this point the DG said that “Certainly, these two trading giants are the most frequent users of the system. This is not surprising since they are the world's biggest traders, as is increasingly the case with China. But the figures also show that developing countries do not play coy hand-maidens to their richer trading partners. During the period 1995-2009, developing countries have been complainants in more than 45 per cent of all cases, and have been respondents in more than 42 per cent of the cases.”
But still the problems are there before the developing countries specially the least developed countries when they have to enforce the findings of the Dispute Settlement Body against developed countries. The examples can be taken from the cases like US-Shrimp Case in which Malaysia tried a lot to enforce the findings against US. Sometimes the developed countries put pressure upon developing countries to make changes in their domestic laws according to the developed country’s interest; and failure of that they impose various type of sanctions under the loopholes of WTO System.
Therefore, the WTO DSM needs some changes so that it can be just, fair and equitable with the poor world. The ongoing review of the functioning of the WTO's dispute settlement system has given rise to many proposals for clarification and improvement. But WTO Members agree that, as the bedrock of the multilateral trading system, the dispute settlement system will not be subject to any seismic shift in its fundamental structure as a result of the Members' deliberations.
Summary of disputes (as of 2 November 2009)
To date, 400 disputes have been brought to the WTO, of which:
• 84 appear to have been resolved bilaterally but for which no outcome notified to WTO
• 95 were resolved bilaterally for which outcome notified to WTO
• 23 were resolved bilaterally after a panel was established but before the panel was composed
• 12 are currently the subject of active consultations between parties
• 186 went into litigation
Contributed by: Manish Sharma, LL.M. II year, NALSAR, Hyderabad.
Email: msharma28@gmail.com
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